Social agencies worried about the loss of low-cost rental housing in the inner city want the Government to provide interest-free loans to landlords who keep rents at below market rates.

Te Whare Roimata and Anglican Care's social justice unit are asking the Government and the Christchurch City Council to throw their weight behind an incentive scheme designed to ensure quality, low-cost housing is made available in the inner-city east after the rebuild.

The agencies are proposing the Government offer interest-free loans to landowners who provide accommodation for disadvantaged tenants at below market rates.

They are worried much of the cheap private accommodation for disadvantaged single people in the inner city has been damaged or destroyed by the quakes and that unless landlords get a helping hand with their rebuild costs, they will have to significantly increase rents in order to recoup their investment.

That would almost certainly put their rental properties out of reach of those struggling on low incomes or benefits.

In a document outlining their solution, the agencies say they have had discussions with seven key landowners in the inner-city east who formerly ran low-cost housing.

Many of them had a social conscience and were interested in rebuilding units that were suitable for struggling low-income renters. However, their former buildings were old and run down and would take significant investment to repair.

The agencies are proposing the Government provide the landowners with a 10-year, interest-free loan to cover some of their building or repair costs.

In return, the landowners will agree to rent their properties at below market rates to disadvantaged tenants who would otherwise struggle to find accommodation.

Landowners participating in the scheme will have to be vetted and registered as "social landlords" and must provide housing that is of good quality, well insulated, and no more than two storeys high.

The role of the city council in the scheme has not been determined, although the agencies were likely to ask it to make some concessions around the building consent process.

Housing Minister Phil Heatley said yesterday he was considering the proposal.

"The Government is already incentivising private sector-led, low-cost housing in the central city via several schemes such as the Christchurch Central Development Unit's residential demonstration project and Housing New Zealand's redevelopment programme, including the 399 Manchester St development," the minister said.